# Valenti v. Hopkins > Oregon Supreme Court · November 21, 1996 · 324 Or. 324 URL: https://www.frixlaw.com/law-library/cases/9542250 ## Case - **Full name:** John G. VALENTI and Margaret M. Valenti, Respondents on Review, v. Benjamin T. HOPKINS and Susan Hopkins, Petitioners on Review - **Court:** Oregon Supreme Court - **Decided:** November 21, 1996 - **Citations:** 324 Or. 324; 926 P.2d 813; 1996 Ore. LEXIS 120 - **Precedential status:** Published - **Opinion:** Dissent by Fadeley - **Judges:** Hoomissen, Carson, Gillette, Van Hoomissen, Fadeley, Graber, Durham, Vanhoomissen - **Cited by:** 15 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9542250 ## How later opinions describe it (automated extraction) - acknowledging Supreme Court’s treatment of restrictive covenants as contractual obligations of homeowners and applying generally applicable rules of contract interpretation to them - describing general standard of review ## Opinion text FADELEY, J., dissenting. I dissent because the majority opinion permits a subdivision’s architectural committee to determine the extent of its own arbitration jurisdiction, contrary to law. I also dissent because the majority’s analysis and result leave this dispute stranded without access to any forum in which it may be *336 heard, and its future application will leave many other potential disputes between lot owners without any mechanism for their resolution. That defeats the purpose of arbitration. I. ARBITRATORS IMPERMISSIBLY REWROTE VIEW PRESERVATION COVENANTS In Sloan v. Journal Publishing Co., 213 Or 324 , 324 P2d 449 (1958), the court touched upon the scope of an arbitrator’s authority. The court stated: “The general rule is that an arbitrator derives his authority solely from the submission agreement of the parties, and the extent of his authority is normally a question of law which is reviewable by the courts. “It is also the rule that an agreement that an arbitrator shall be the final judge of his own jurisdiction must be clear and unequivocal before it will be given effect.” Id. at 366 (citations omitted). In Brewer v. Allstate Insurance Co., 248 Or 558 , 436 P2d 547 (1968), the court found an arbitrator’s decision not reviewable. Plaintiffs statutory exception to the award rested on the ground that their arbitrator exceeded his power in that he determined that the claimant had a certain burden of proof. The court rejected plaintiffs claim. The court held that “[t]he arbitrator acts within the bounds of his authority not only when he decides a question of law correctly according to judicial standards, but also when he applies the law in a manner which a court would regard as erroneous.” 248 Or at 561-62 . The Brewer court, id. at 562 , quoted Mahaffy v. Gray, 242 Or 522, 525 , 410 P2d 822 (1966), for the proposition that “[n] either a mistake of fact or law vitiates an award.” That is so because the purpose of arbitration is to avoid litigation, by the device of settling all disputes that fall in the area committed by contract to arbitration. Based on those cases, the Oregon rule is that the court will review questions of an arbitrator’s authority to determine the scope of the arbitrator’s jurisdiction, but will not review the determination of a matter of law concerning the merits of a dispute, when that determination is made by an arbitrator with express authority to make it. With that *337 distinction in mind, I turn to the facts of this dispute between lot owners in the same subdivision. The subdivision is named “West Ridge,” apparently because of its superlative, year-round view of snow-capped mountains to the west. Plaintiffs and defendants are neighbors who live across the street from each other on West Ridge Avenue. All lots in the subdivision are subject to restrictive covenants to which each purchaser must agree as part of the act of becoming a lot owner in that subdivision. The covenants form a contract among all owners of lots in the subdivision, a contract that restricts the property rights of all owners from the time that they purchase a lot. 1 The subdivision covenants provide, in relation to “[t]he height of improvements * * * on a lot,” that each of the “neighboring homes within the West Ridge Subdivision” is to be protected from proposed developments that “would be incompatible with the neighboring-homes.” The subdivision’s Architectural Control Committee (committee) is required to include in its incompatibility decision-making: “Considerations such as size, height, * * * view, effect on other lots.” Article III, section 4, of the covenants also expressly provides: “The height of improvements * * * on a lot shall not materially obstruct the view of adjacent lot owners. The [committee] shall judge the suitability of such heights and may impose restrictions.” The committee refused to make any suitability decision in this dispute, thus defeating the purpose for arbitration. The committee justified that refusal on two bases. A. No West View The committee 2 denied any guarantee to plaintiffs of any view to the west, notwithstanding the provisions of the *338 covenants. The westerly view is of relatively nearby Cascade peaks. The committee refused to “judge the suitability of’ the height of defendant’s new construction. To explain that refusal, the committee simply relied on a past committee’s declaration that no one on the east side of the street had any view to the west at all, a denial that impinges on half of the lots on West Ridge Avenue. At the time that the committee changed the covenants to limit them to views in one direction, its members expressly explained that action as based on the price of the lots. West-side lots cost more. East-side lots cost less. Therefore, the committee declared, regardless of the provisions of the covenants, no east-side lot had any right at all to a view of the snow-capped mountains from their front, west-facing windows, whether the windows were upstairs or down. In short, the committee rejected jurisdiction over half of the disputes or suitability determinations committed to them by the covenants. That ruling, although it doubtless simplified the committee’s task, cannot be justified under the covenants or the law applicable to them, because it alters the jurisdiction that is committed to the arbitrators in the covenant contract by limiting that jurisdiction to only some disputes, while providing no other method for resolution of other disputes arising under the covenants. The limitation means that the arbitrators will refuse, as they did in this case, to hear and decide real disputes. Under the majority interpretation, no litigation is possible because the matter is committed to arbitration, but no arbitral resolution is possible in these orphan disputes either. B. Not Adjacent Later, during this litigation, the committee decision was also stated to be based on an interpretation of the word “adjacent” to not include, for east-side lot owners, any lots neighboring to the west. Lots located across the street from each other were said, on behalf of the committee, not to be “adjacent.” That limitation of arbitral jurisdiction is based on *339 an erroneous meaning of the word. And, again, the committee uses that construction to limit its own jurisdiction, stranding half of the potential disputes committed to them by the plain language of the covenants. In Kampstra v. Salem Hts. Water Dist., 237 Or 336 , 391 P2d 641 (1964), a water district sought to charge commercial property owners for the cost of laying a water main. The court discussed the water district’s determination that the property was “adjacent,” stating: “The term ‘adjacent’ is a relative one and has been held, under other property-assessment statutes, to include non-abutting property which lies sufficiently near the subject improvement to be benefited by the improvement. Lapp v. Marshfield, 72 Or 573, 577 , 144 P 83 (1914). See also Clark v. City of Salem, 61 Or 116, 119 , 121 P 416 (1912).” 237 Or at 340 . The two cases cited in Kampstra appropriately discuss the term “adjacent.” In Clark, 61 Or at 119 , the court declared: “The term ‘adjacent’ includes property in the neighborhood of the improvement though not actually touching thereon. 25 Am. & Eng. Enc. Law, (2 ed.) 1191.” In Lapp, 72 Or at 577 , another action involving collecting an assessment for public improvements, the court stated: “Neither is there any validity to plaintiffs contention that his land does not abut on the street to be improved, and is therefore immune from assessment. The city charter of Marshfield provides that assessments of this character may be made upon adjacent property. This includes lands which, while not immediately abutting on the improvement, lie so near thereto as to be benefited by it: Page & Jones, Taxation by Assessment, § 622; Kirkpatrick v. City of Dallas, 58 Or. 511 ( 115 Pac. 424 ) [1911]; Town of Woodruff Place v. Raschig, 147 Ind. 517 ( 46 N.E. 990 ) [1897]; Hennessy v. Douglas County, 99 Wis. 129 ( 74 N.W. 983 ) [1898].” Black’s Law Dictionary, 41 (6th ed 1990), joins our case law by defining “adjacent” much more broadly than the committee. Definition of a different word, “adjoining,” taken from the same source provides a useful and telling contrast. It appears that the committee interpreted the covenant consistent with the legal definition of “adjoining,” and not “adjacent.” In Black’s, those contrasting definitions are: *340 “Adjacent. Lying near or close to; sometimes, contiguous; neighboring. Adjacent implies that the two objects are not widely separated, though they may not actually touch, while adjoining imports that they are so joined or united to each other that no third object intervenes. See Adjoining.” Ibid, (citations omitted). “Adjoining. The word in its etymological sense means touching or contiguous, as distinguished from lying near to or adjacent. To be in contact with; to abut upon. And the same meaning has been given to it when used in statutes. See Adjacent.” Ibid, (citation omitted). II. THE AUTHORITIES DO NOT SUPPORT REWRITING COVENANTS None of the case authorities cited and relied on by the majority fits this case. None involves a change in jurisdictional covenants initiated by an arbitral committee or by any other persons established under the contract as the “judge” of suitability. The majority relies on Friberg v. Elrod et al., 136 Or 186 , 296 P 1061 (1931), to establish the “standard of review” for suitability decisions made by a local subdivision committee under recorded covenants. But the Friberg decision was about a “sole judge” who was empowered by contract to establish the amount owed under a mechanic’s lien, not about application of realty covenants. Friberg was based on a contract that gave an engineer-arbiter “broad authority to determine all questions” and made the engineer “sole” judge about amounts owed. Equally important to the Friberg decision was the holding that this court and not the arbiter interpreted the contract, which plainly gave the arbiter authority to determine amounts due to persons performing work. In Friberg , this court did not “defer” to any interpretation of the contract by the arbiter; there was no such interpretation. Nor did the court abdicate the court’s responsibility to construe the agreed jurisdiction of the arbiters as set out in a contract. Rather, in Friberg , this court itself interpreted and enforced the terms of the contract. On the question of enforcement, the terms of the West Ridge Subdivision covenants expressly provide that: *341 “Enforcement shall be by proceeding at law * * * against any person or persons violating or attempting to violate any Covenants.” Article IV, section 2, of the amended subdivision covenants, titled “Enforcement.” Neither the express terms of the covenants nor the decision in Friberg empowers the local committee to rewrite the terms of the covenants to limit the kinds of disputes that come within the arbitrator’s jurisdiction, as the committee did in this case. Other cases cited and relied on by the majority do not permit that sort of rewriting of the covenants, let alone judicial “deference” to the rewritten terms. In Hanson v. Salishan Properties, Inc., 267 Or 199 , 515 P2d 1325 (1973), the covenant provided that neighboring views “shall be preserved to the greatest extent reasonably possible.” Id. at 202 . The local committee in that case acted to preserve the views to the greatest extent possible, as the committee saw it. The committee did not say: “No view at all in that direction.” That is, the committee performed the function expressly assigned to it by the contract, as this court (not the committee) interpreted the contract. That case does not involve a “committee interpretation” of the terms of the contract. Lincoln Const. v. Thomas J. Parker & Assoc., 289 Or 687 , 617 P2d 606 (1980), also cited by the majority is a case involving a contract to supply gravel. By its terms, that contract submitted all breach of contract disputes to a designated arbiter. In Lincoln, this court held: “When a contract clearly expresses that a third person is to make final decisions respecting specified matters, such agreement is enforceable.” Id. at 692 (emphasis added). However, the court held that the contract itself must be followed and that, when a different person than the one contractually agreed upon had made the determination, that determination was not enforceable. Lincoln supports the position taken in this dissent, as indeed, do all of the foregoing cases relied on by the majority. In accordance with Lincoln, this court should remand the case with instructions that the contract be enforced, that is, *342 that the committee must make an individual suitability decision that includes consideration of plaintiffs’ view. The committee is the “judge” of that suitability issue as to construction of improvements, but the covenants in this case provide that, in making its determination, the committee is to consider the effect on the view from “neighboring” or “adjacent” lots. It does not say that the committee may take away the right to all westerly view front some lots. Moreover, nothing said in Lincoln removes from the court its legal duty of interpreting the scope of jurisdiction conferred by dispute resolution contracts involving real property rights. 3 In brief, the majority mistakes both precedent and the terms of the covenant. Decisions of arbiters in a specific case, when made pursuant to a contract, are final. But interpretations that limit the scope of the committee’s arbitral jurisdiction by rewriting the terms of the contract are neither supported by the terms of the contract, nor by the cases cited. Nonetheless, it is the committee rewrite limiting its jurisdiction and leaving many disputes concerning a blocked view without any mechanism for their resolution to which the majority defers, not the suitability decision actually made and based on the pertinent criteria from the covenant contract. Delegation by contract of the power to decide a dispute pursuant to the terms of the contract does not equal delegation of the power to alter the scope of jurisdiction of the arbitrators by altering the terms of the submission of disputes to them that is stated in the contract. The majority simply fails to note the difference and, by reason of that failure, errs. I respectfully dissent. In this respect, the binding contract created by the covenants may be properly classified as a contract of adhesion. The committee members are elected annually but, under the majority’s “rule,” the decision of a committee that is no longer in office prevents resolution of any new dispute where the lot ownerships are not contiguously adjoining. An arbitration may be common law, statutory, or court administered. Oregon has statutorily recognized and regulated arbitration for the purpose of settling disputes since 1925. Oregon Laws 1925, chapter 186, now codified as amended as ORS 36.300 to 36.365, and formerly codified as ORS 33.210 to 33.340. ORS 36.310, 36.335 and 36.355(1), especially paragraph (d), appear applicable here, although not mentioned by the majority. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9542250. Public record. Not legal advice.